Biofuel co-products as livestock feed - Opportunities and challenges

1Chapter 1An outlook on world biofuel production andits implications for the animal feed industryGeoff Cooper 1 and J. Alan Weber 21Renewable Fuels Association, 16024 Manchester Road, Suite 223, Ellisville, Missouri 63011, United States of America2Marc-IV Consulting, Inc., 3801 Bray Court, Columbia, Missouri 65203, United States of AmericaE-mail for correspondence: gcooper@ethanolrfa.orgABSTRACTMany countries have adopted policies that support expanded production and use of liquid biofuels for transportation.These policies are intended to enhance domestic energy security, spur economic development and reduceemissions of greenhouse gases (GHG) and other pollutants. Biofuel policies, along with changing energy marketfundamentals, have contributed to a significant increase in global biofuel production in recent years. While considerableresearch and development is under way to commercialize new types of biofuel and feedstocks, the twoprimary biofuels produced globally today – ethanol and biodiesel – are predominantly derived from agriculturalcommodities, such as grain, sugar and oilseeds. The use of certain feedstocks for biofuels production also results inthe co-production of animal feed. Globally, these animal feed co-products are growing in volume and importance.The increased use of agricultural commodities for biofuels is generally expected to contribute to marginally highercosts for certain livestock and poultry feeds, though the impacts are shown by the literature to be modest in natureand there are offsetting effects. Increased substitution of co-products for traditional feedstuffs in feed rations helpsmitigate potential input cost increases faced by livestock and poultry producers. Further, increased agriculturalproductivity and output has ensured that the global supply of crops available for non-biofuels uses has continuedto grow in the long term. Growth in the use of agricultural commodities for biofuels is expected to continue in thenext 10 years, but with growth rates slowing in key producing countries as government-imposed limits on grainuse for biofuels are reached and new non-agricultural feedstocks are commercialized.INTRODUCTION – THE CASE FOR EXPANDINGBIOFUEL PRODUCTIONThe confluence of several economic, geopolitical and environmentalfactors in recent years has stimulated increasedglobal interest in advancing the production and consumptionof liquid biofuels for transportation. Historically, interestin biofuels has been primarily driven by national desires toenhance energy security and reduce dependency on fossilfuels. Through stimulation of demand for agricultural commodities,biofuels have also been promoted as a means ofenhancing rural economic development and increasing farmincome. More recently, however, biofuels have been endorsedas a key component of national and international strategies toreduce greenhouse gas (GHG) emissions and mitigate potentialclimate change effects. As seen in Figure 1, these factorshave contributed to a significant increase in global biofuelsproduction in recent years, with world output growing nearlyfive-fold between 2001 and 2009 (U.S. EIA, 2010).Government policyIn an effort to decrease fossil fuel use, stimulate economicdevelopment and reduce GHG emissions, many nationalgovernments have enacted policies in recent years thatsupport increased domestic production and use of biofuels.For example, Brazil mandates the minimum level ofethanol that must be blended with petrol. Brazil previouslyprovided subsidies to ensure the price of ethanol wasbelow the price of petrol and required the nation’s largestpetroleum company to purchase increasing amounts ofethanol (Hofstrand, 2009). Both Brazil and Argentina alsohave established programmes requiring that biodiesel beblended into petroleum diesel at specified levels. In theUnited States, Congress established a Renewable FuelStandard (RFS) in 2005 requiring that petroleum refinersblend increasing volumes of renewable fuels, includingbiofuels like ethanol and biodiesel. The RFS was modifiedand expanded in the Energy Independence and SecurityAct of 2007, requiring petroleum refiners to use 136 billionlitres (36 billion gallons) of renewable fuels annuallyby 2022. The United States also provides fuel excise taxcredits, which were scheduled to expire on 31 December2011, to petrol and diesel fuel blenders who blend ethanoland biodiesel. In the European Union, various memberstates have established mandates and provided fuel excise